Johnson Matthey (JMAT) H2 2025 earnings summary

Executive summary

• Sale of Catalyst Technologies to Honeywell for GBP 1.8 billion, with GBP 1.4 billion to be returned to shareholders, marking significant value realization after operational improvements.

• Strategic transformation doubled CT margins, improved Clean Air margins from 8.7% to 11.8%, and completed a group transformation delivering GBP 200 million in cost savings.

• Transitioning to a focused, lean business with enhanced cash generation and shareholder returns.

• New refinery investment in PGMs to drive cash generation and efficiency, with commissioning expected by end of 2025/26.

• Commitment to GBP 200 million annual shareholder returns from 2026/27 and sustainable free cash flow of at least GBP 250 million by 2027/28.

Financial highlights

• Underlying operating profit up 5% year-over-year despite a 2% like-for-like sales decline, mainly due to self-help measures.

• Free cash flow positive for the year, with GBP 521 million reported (GBP 36 million excluding divestments); medical devices business sale generated GBP 491 million profit.

• Net debt reduced to GBP 799 million, leverage at 1.4x after GBP 400 million returned to shareholders.

• Clean Air sales declined 8% to GBP 2,319 million, but margin improved to 13.2% in H2.

• PGMs nearly doubled profitability in H2; hydrogen losses halved sequentially.

Outlook and guidance

• Expecting mid-single-digit CAGR in pro forma operating profit and sustainable free cash flow of at least GBP 250 million by 2027/28.

• Clean Air margins targeted at 16-18% by 2027/28, with sales above GBP 2 billion, 90% of which is already secured.

• PGMs expected to deliver GBP 450 million sales and ~30% margin by 2027/28, with strong cash conversion as new refinery comes online.

• Hydrogen business targeted to reach break-even by end of 2025/26.

• GBP 200 million annual shareholder returns from 2026/27 onwards, split between dividends and capital returns.